It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Jiangsu Nhwa Pharmaceutical (SZSE:002262). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

Jiangsu Nhwa Pharmaceutical's Earnings Per Share Are Growing

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Over the last three years, Jiangsu Nhwa Pharmaceutical has grown EPS by 14% per year. That's a pretty good rate, if the company can sustain it.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. EBIT margins for Jiangsu Nhwa Pharmaceutical remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 16% to CN¥4.8b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

Fortunately, we've got access to analyst forecasts of Jiangsu Nhwa Pharmaceutical's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Jiangsu Nhwa Pharmaceutical Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that Jiangsu Nhwa Pharmaceutical insiders have a significant amount of capital invested in the stock. Notably, they have an enviable stake in the company, worth CN¥4.1b. That equates to 18% of the company, making insiders powerful and aligned with other shareholders. Very encouraging.

Does Jiangsu Nhwa Pharmaceutical Deserve A Spot On Your Watchlist?

As previously touched on, Jiangsu Nhwa Pharmaceutical is a growing business, which is encouraging. For those who are looking for a little more than this, the high level of insider ownership enhances our enthusiasm for this growth. That combination is very appealing. So yes, we do think the stock is worth keeping an eye on. Now, you could try to make up your mind on Jiangsu Nhwa Pharmaceutical by focusing on just these factors, or you could also consider how its price-to-earnings ratio compares to other companies in its industry.

Although Jiangsu Nhwa Pharmaceutical certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with insider buying, then check out this handpicked selection of Chinese companies that not only boast of strong growth but have also seen recent insider buying..

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.